Major financial institutions are axing their sustainability teams and phasing out green job roles. The reversal might not drastically impact their net-zero goals, but at a time when more firms are pushing back their sustainability pledges than ever before – consumers could get the wrong idea and flock to challenger banks.
Big banks are showing sustainability bosses the door. Standard Chartered has slashed the team led by its chief sustainability officer Marisa Drew from about 140 to 90 over the past year, while Barclays’ group head of sustainability Laura Barlow left the role in January – a position that won’t be replaced.
HSBC, who absorbed their former CSO role into the CFO role, said that the global energy transition had been “slower than envisaged” because of factors outside its control. But importantly, the sustainability slowdown comes after Trump's rollback on major environmental policies in the US, which has shifted the legislative framework around green investments in favour of high carbon emitting ones.
It's not the first time banks have retreated from their sustainability commitments this year. Just before Trump took office in January, several US banks withdrew from the Net-Zero Banking Alliance, a move that heavily disincentivised their climate goals.
Axing CSO roles isn’t exactly the nail in the coffin for banks’ net zero goals. Restructuring teams could help banks to drive a leaner, more efficient net-zero strategy. And I fully recognise that big banks are at the mercy of external market pressures, especially Trump’s political agenda.
But the collective retreat from their climate responsibilities is incredibly short-sighted. It sets the tone that they’ll only prioritise sustainability when it suits the market conditions.
Challenger banks will capitalise on this mistake. Monzo, Revolut, and Starling, by their very nature, exist as an alternative to the big financial institutions. When consumers are fed up with the big banks, they set up an account with a challenger bank. The 2008 Financial Crisis sparked an exodus. But in 2025 the flashpoint could well be sustainability pledges.
Big banks should resist hasty changes to sustainability teams. Last year, Nike's CEO John Donahue faced fierce backlash after slashing its ESG department by 30%. The sneaker and apparel boss had intended to cut costs amid plummeting sales, but his decision arguably left the firm worse off. Donahue exited the role just weeks later amid fierce internal backlash, leaving a gaping hole in its 2050 net zero pledge.
In 2025, you just can't renege on sustainability commitments. It's a consumer demand that permeates nearly every sector, whether you're HSBC, Nike, or a multinational carmaker.
Consumers are willing to spend an average of 9.7% more on sustainably produced or sourced goods, even as cost-of-living and inflationary concerns weigh heavily. And it's the challenger banks who will reap the rewards.
If I were the CEO of Monzo, I'd not only capitalise on the big banks' mistakes. I'd double down on the firm’s net-zero roadmap. Not only because, by and large, they are already perceived as a more sustainable bank. But because consumers actively want their investments, savings, and other financial products to have minimal impact on the environment.
A Cambridge University study showed that consumers would prefer a sustainable fund even if they have to sacrifice up to 2.5 per cent returns. That’s a preference that's even stronger among millennials and Gen-Zers – who, conveniently, make up neobanks’ largest client base.
Consumers want good returns on their financial investments. That is true. But amid the climate crisis, people also want their lenders to demonstrate they are committed to sustainable best practice. This is why neobanks, if they remain steadfast to their net-zero pledges and resist the urge to fire their CSOs, could steal a march on the bigger players.